"The Last Innings of a Very Bad Ball Game"

We have posted numerous times about the Federal Reserve and wondered aloud how they will be able to print money forever...artificially holding interest rates in the U.S. at 0%...without having SERIOUS repercussions.

Now we have some other insiders telling us that we are, in fact, in the very last innings of a very bad ball game that the Fed has been playing.

A "paralyzed" Federal Reserve Bank, in its "final days," held hostage by Wall Street "robots" trading in markets that are "artificially medicated" are just a few of the bleak observations shared by David Stockman, former Republican U.S. Congressman and director of the Office of Management and Budget. He is also a founding partner of Heartland Industrial Partners and the author of The Triumph of Politics: Why Reagan's Revolution Failed and the soon-to-be released The Great Deformation: How Crony Capitalism Corrupts Free Markets and Democracy. The Gold Report caught up with Stockman for this exclusive interview at the recent Recovery Reality Check conference.

The Gold Report: David, you have talked and written about the effect of government-funded, debt-fueled spending on the stock market. What will be the real impact of quantitative easing?

David Stockman: We are in the last innings of a very bad ball game. We are coping with the crash of a 30-year–long debt super-cycle and the aftermath of an unsustainable bubble.

Quantitative easing is making it worse by facilitating more public-sector borrowing and preventing debt liquidation in the private sector—both erroneous steps in my view. The federal government is not getting its financial house in order. We are on the edge of a crisis in the bond markets. It has already happened in Europe and will be coming to our neighborhood soon.

The Fed is destroying the capital market by pegging and manipulating the price of money and debt capital. Interest rates signal nothing anymore because they are zero.

TGR: If we are in the final innings of a debt super-cycle, what is the catalyst that will end the game?

DS: I think the likely catalyst is a breakdown of the U.S. government bond market. It is the heart of the fixed income market and, therefore, the world's financial market.

As long as the hedge fund traders and fast-money boys believe the Fed can keep everything pegged, we may limp along. The minute they lose confidence, they will unwind their trades.

Here;  http://www.zerohedge.com/news/guest-post-emperor-naked

Holy Loss of Confidence!!!  Then what happens??  Then the entire U.S. Treasury debt begins to unravel....and since Treasury Bonds are the staple of the world's entire fixed income portfolio...the rest of the bonds around the world will also start to unravel as people desperately try and figure out where to run to escape the destruction of their precious wealth.

I hope we have built our houses on the Rock that will survive all coming storms. I hope we have laid up our treasure in heaven where it will not be destroyed....because that's what our Master told us to do.

Hat tip to Wilson R.